Exploiting Information Technology for Development: A Case Study of India

This paper proposes a framework for developing a national strategy for information technology development and diffusion in support of economy-wide competitiveness. The specific country case is India, a developing economy with substantial promise to become a global player in the software services. It is also a country where timely information is scarce and transactions costs are high, and thus provides a developmental context for demonstrating the strategic impact of this technology. The study first analyzes the information and communication needs of India's economy and the constraints to a dynamic domestic market for information and software services. The study then assesses the competitiveness of India's hardware and software industries. Translating the potential of information technology into effective demand and successful application requires concerted action by the public and private sectors on developing policies, institutions, investment and capabilities. The study outlines the rationale for a coherent and long-term strategy for information technology specifically tailored to enhance India's competitiveness and exports. The main elements are (a) measures to mobilize demand in the private sector and to target strategic applications for public sector modernization; (b) programs to strengthen software industry capabilities and export networks; and (c) policy and infrastructural measures to strengthen both supply and demand and lay the foundation for sustained development. Various options are proposed in support of each element of the strategy. The respective roles of government and private sector are explored. The argument is put forward that national information technology strategies could provide a coherent framework to exploit synergies and develop collaborative actions, and that governments can play key roles as catalysts, regulators, investors, users and strategists.